Sweden, seen for years as a beacon of stability and reforms in a crisis-ridden Europe, may be heading for political deadlock after Sunday’s general election, with polls suggesting that both right and left might be unable to form a stable government. Prime Minister Fredrik Reinfeldt’s center-right coalition is battling an opposition alliance led by the Social Democrats. But neither group looks set to win a majority – putting them at the mercy of more radical leftist or far-right parties. The Social Democrats, campaigning to spend more money on a welfare state that they founded in the last century, were the election favorites for months. But some polls suggest a once seemingly unassailable lead has narrowed, unsettling businesses and investors and even raising the prospect of a new vote. “It could be an Italian situation, something we’ve hardly ever experienced in Sweden,” said Magnus Henrekson, Director of the Research Institute of Industrial Economics. An increasingly likely scenario is that Social Democrat leader Stefan Lofven will head the biggest party but struggle to cobble together a majority. Even if he won the support of a former communist party, he could still be in a minority against the far right and Reinfeldt’s coalition.
Under eight years of Reinfeldt, the government slashed taxes by 130 billion Swedish crowns ($18.3 billion) and trimmed welfare spending. The tax burden fell by about four percentage points to around 45 percent of GDP – less than that of France.
Despite recovering from the global financial crisis better than most – with more Michelin star restaurants than ever sprouting in the capital and house prices booming – many voters are increasingly concerned over poor education standards and the growing role of private equity firms in running healthcare.
With youth unemployment high and a general sense that the government was stale after two terms in power, it seemed voters wanted a change. But that political backlash has split between social democrats, the far right and far left.